NEW YORK, Dec. 04, 2024 (GLOBE NEWSWIRE) -- Bragar Eagel & Squire, P.C., a nationally recognized shareholder rights law firm, is investigating potential claims against ZoomInfo Technologies Inc. (NASDAQ: ZI) on behalf of long-term stockholders following a class action complaint that was filed against ZoomInfo on September 4, 2024 with a Class Period from November 10, 2020, and August 5, 2024. Our investigation concerns whether the board of directors of ZoomInfo have breached their fiduciary duties to the company.
ZoomInfo is a software and data company that provides customer contact and business information to its clients.
The ZoomInfo class action lawsuit alleges that defendants throughout the Class Period made false and/or misleading statements and/or failed to disclose that: (i) ZoomInfo’s financial and operational results during the Class Period had been temporarily inflated by the ephemeral effects of the COVID-19 pandemic, which had pulled-forward demand for ZoomInfo’s database of digital contact information; (ii) material portions of ZoomInfo’s existing customer base were attempting to either substantially reduce their use of ZoomInfo’s product or abandon it altogether; (iii) ZoomInfo had used manipulative and coercive auto-renew policies and threats of litigation to force customers into remaining with ZoomInfo for an additional contractual term even though such customers did not want to; (iv) ZoomInfo’s coercive customer retention tactics had materially damaged ZoomInfo’s customer relationships, client franchise, and competitive advantages, and created a hidden demand cliff for customer contract renewals in future periods; and (v) as a result of all of the above, ZoomInfo’s reported revenues, operating income, and customer and retention metrics were materially overstated.
On November 1, 2022, ZoomInfo announced financial results for the third fiscal quarter of 2022, revealing that it had experienced increased “scrutiny” by customers during the contract renewal process, which negatively impacted ZoomInfo’s financial results in the quarter and would cause ZoomInfo to “retrace” Net Revenue Retention (“NRR”) gains achieved in 2021. Further reflecting this loss of business, ZoomInfo further revealed that its total Remaining Performance Obligations (“RPOs”) fell to $979 million, compared to $985 million the prior quarter, and that current RPOs fell to $757 million, compared to $764 million the prior quarter. On this news, the price of ZoomInfo Class A common stock fell more than 29%.
Then, on November 16, 2022, ZoomInfo revealed that intense customer scrutiny during the contract renewal process had continued into the fourth quarter, which would negatively impact ZoomInfo’s ability to grow its revenues in fiscal year 2023. On this news, the price of ZoomInfo Class A common stock fell approximately 17% over two trading sessions.
Thereafter, on July 31, 2023, ZoomInfo announced financial results for the second fiscal quarter of 2023, revealing that ZoomInfo’s customers with annual contract values of $100,000 or greater had declined to 1,893 from 1,905 such clients in the prior quarter. ZoomInfo further reduced its annual revenue guidance from a range of $1.275 billion to $1.285 billion to a range of $1.225 billion to $1.235 billion, representing a reduction of $50 million at the mid-point. On this news, the price of ZoomInfo Class A common stock fell approximately 28% over two trading sessions.
Subsequently, on May 7, 2024, ZoomInfo announced financial results for the first fiscal quarter of 2024, disclosing that it had a large pool of small business customers that exhibited “weakness” during renewals in the period, which had caused NRR to decline sequentially to 85% from the 87% reported in the fourth quarter. ZoomInfo further reduced its annual revenue guidance from range of $1.26 billion to $1.28 billion to a range of $1.255 billion to $1.27 billion. On this news, the price of ZoomInfo Class A common stock fell more than 24%.
Finally, on August 5, 2024, ZoomInfo announced financial results for the second fiscal quarter of 2024, disclosing that ZoomInfo was incurring a $33 million charge due to non-payments from customers and had been forced to implement a “new business risk model” to reduce write-offs. In connection with its new risk model, ZoomInfo stated it was altering its operational procedures to require up-front payments from small business customers, indicating that many of ZoomInfo’s previous customers had been unable to afford ZoomInfo’s products and services. As a result, ZoomInfo further reduced its annual revenue guidance by $65 million at the midpoint, from a range of $1.255 billion to $1.27 billion to a range of $1.19 billion to $1.205 billion. On this news, the price of ZoomInfo Class A common stock fell more than 18%.
If you are a long-term stockholder of ZoomInfo, have information, would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Brandon Walker or Marion Passmore by email at investigations@bespc.com, by telephone at (212) 355-4648, or by filling out this contact form. There is no cost or obligation to you.
About Bragar Eagel & Squire, P.C.:
Bragar Eagel & Squire, P.C. is a nationally recognized law firm with offices in New York, California, and South Carolina. The firm represents individual and institutional investors in commercial, securities, derivative, and other complex litigation in state and federal courts across the country. For more information about the firm, please visit www.bespc.com. Attorney advertising. Prior results do not guarantee similar outcomes.
Contact Information:
Bragar Eagel & Squire, P.C.
Brandon Walker, Esq.
Marion Passmore, Esq.
(212) 355-4648
investigations@bespc.com
www.bespc.com
